Electronic Arts 2002 Annual Report Download - page 32

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Pro forma net income, excluding the items noted above, was $135,195,000 for the fiscal year ended March
31, 2002 and $5,995,000 for the fiscal year ended March 31, 2001.The increase in pro forma net income
for the fiscal year ended March 31, 2002 was due to higher revenues and gross profits as compared to the
same periods last year.This was partially offset by an increase in marketing and sales expenses to support
programs for key titles shipped in the current year.
With the implementation of new accounting pronouncements relating to goodwill and intangible assets
(see Impact of Recently Issued Accounting Standards on page 38) as of April 2002, we will continue to
amortize finite-lived intangibles, but will no longer amortize goodwill and acquired workforce. Amortization
of goodwill and acquired workforce totaled approximately $13,125,000 for fiscal 2002 and approximately
$9,182,000 for fiscal 2001. Based on intangible assets as of March 31, 2002 we estimate that amortiza-
tion of finite-lived intangibles will total approximately $8,700,000 for fiscal 2003. Following adoption of
SFAS 142, we will continue to evaluate whether any event has occurred which might indicate that the
carrying value of an intangible asset is not recoverable. In addition, SFAS 142 requires that goodwill be
subject to at least an annual assessment for impairment by applying a fair value-based test. We are in the
process of completing an evaluation for impairment of goodwill in accordance with SFAS 142. We believe
the implementation of SFAS 142 will not have a material impact on our consolidated financial statements.
Comparison of Fiscal 2001 to 2000:
REVENUES
Information about our net revenues for North America and foreign areas for fiscal 2001 and 2000 is sum-
marized below (in thousands):
INCREASE/
2001 2000 (DECREASE) % CHANGE
North America $ 831,924 $ 846,637 $ (14,713) (1.7 %)
Europe 386,728 486,816 (100,088) (20.6 %)
Asia Pacific 51,039 53,187 (2,148) (4.0 %)
Japan 52,582 33,371 19,211 57.6 %
International 490,349 573,374 (83,025) (14.5 %)
Consolidated Net Revenues $ 1,322,273 $ 1,420,011 $ (97,738) (6.9 %)
North America Net Revenues
The decrease in North America net revenues for fiscal 2001 compared to fiscal 2000 was primarily
attributable to:
|•••»Expected declines in sales of PlayStation and N64 titles due to the beginning of the transition to next
generation consoles. PlayStation net revenues decreased 49% and N64 net revenues decreased 46%
also due to fewer titles shipping in fiscal 2001 for both platforms.
|•••»A 6% decrease in AL revenues primarily due to the acquisition of an affiliate, DreamWorks Interac-
tive, by us in the fourth quarter of fiscal 2000.
|•••»Offset partially by the launch of PlayStation 2 platform in North America which generated
$171,034,000 in revenue for fiscal 2001 from titles such as
Madden NFL 2001
,
SSX
,
NBA Live 2001
and
NHL 2001
.PlayStation 2 revenues in fiscal 2001 did not offset the decrease in PlayStation rev-
enues due to a reduced number of hardware units reaching the market due to hardware component
shortages, according to Sony.
|•••»Offset by a 21% increase in PC revenues due to the shipment of key releases including
Command &
Conquer Red Alert™2
and
The Sims Livin’ Large
and continued strong catalog sales of
The Sims
in
fiscal 2001.
International Net Revenues
The decrease in international net revenues for fiscal 2001 compared to fiscal 2000 was attributable to
the following:
|•••»Europe’s net revenues decreased 21% primarily due to the console transition, lower AL sales due to
product release slips and fewer hit titles released in fiscal 2001, lower PC sales with fewer titles ship-
ping in fiscal 2001, the strong sales of
Command & Conquer Tiberian Sun™
for the PC in fiscal 2000,
and weakness in the Euro currency. In addition, PlayStation revenues decreased 43% due to fewer
titles shipping during the console transition period in fiscal 2001 with most franchise titles showing
EA 2002 AR
28